The major indices are mixed with a slight bearish bias at midday following another busy overnight session. The main U.S. Index futures shot higher in Asian trading thanks to the continued domestic reopening push, but risk assets got under pressure in Europe, due to a few concerning COVID-related reports from South Korea, China, and Germany. While there are still no major secondary outbreaks in the countries being ahead in their reopening schedules, all three nations reported an uptick in new cases, with South Korea delaying the reopening of its schools because of a fresh cluster of 80 infections.
Economic Gloom And The Fears Of Secondary Outbreaks
The domestic economic calendar was empty today but Italian industrial production missed expectations in pre-market trading by a wide margin, adding to the worries regarding the European recovery. The economic gloom and the fears of a wave of secondary outbreaks led to the reversal of last week’s risk rally on Wall Street, but the technical damage has been limited, so far, with tech stocks once again showing resilience and U.S. stocks retaining their relative strength from a global perspective.
Dow: 24,166, - 165 or 0.7%
S&P 500: 2,917 - 13 or 0.5%
Nasdaq: 9,153, + 32 or 0.4%
Russell 2000: 1,308, - 21 or 1.6%
Market breadth has been very weak this morning due to the broad weakness outside of the tech sector, with decliners outnumbering advancing issues by a 5-to-1 ratio on the NYSE at midday. Only 12 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 64 stocks hit new 52-week highs. The major indices have been trading above their VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to intraday buying pressure. While the most lockdown-sensitive cyclical issues have been under pressure today, other risk measures, such as the Volatility Index (VIX) and Treasury yields aren’t flashing red, so the Nasdaq’s strength could be enough to spark an afternoon rally in stocks. Stay tuned!